Microsoft Strategy Update: Windows RT and Windows Phone

In this second look at some of the information Microsoft provided at its Financial Analysts Meeting, we see how Microsoft is evolving Windows RT and Windows Phone into something that I think makes a lot more sense: A single product line with a single runtime and app model.

It's fair to say that while both products have yet to take off appreciably in the marketplace—Microsoft CEO Steve Ballmer yesterday referred to the firm's slowness in entering the smart phone market as his "biggest regret"—both target very important markets. Hardware makers will sell over 1 billion smart phones this year, three times the market for PCs. And these firms will sell hundreds of millions of tablets this year as well, a market that could exceed the size of the PC market as soon as the end of 2013. Microsoft desperately needs to be part of that.

So how do they get there?

To find out the answer, let's turn to Terry Myerson, the former lead on Windows Phone who now somehow oversees all of Microsoft's OS development. As with Apple before it—Craig Federighi this past year took over all OS development at that firm in the past year, combining previously separate Mac OS X and iOS efforts—Microsoft is clearly looking for synergy. And that synergy will come at both a high-level—common or similar user experiences across major platforms like Windows, Phone, Server, Xbox, and Office—but also at a very low-level, in the OS, where the company could certainly do some consolidating.

So let's look at both. High-level and low-level.

Regarding the former, here's what he said when asked about how or whether Microsoft would create a "common development platform across multiple screens," edited heavily for readability.

"We've ... brought all the OS groups together at the company," he said, "and have organized all of our efforts in the operating system area around three key beliefs. The first is that we really should have one silicon interface for all of our devices, one set of developer APIs on all of our devices, and [that] all of the apps we bring to end users should be available on all of our devices."

"The second is that all of our devices are becoming more cloud-powered. So whether we're branding them Windows or Xbox, we really need one core service which is enabling all of our devices."

"And the third is that each of our devices require a tailored experience to be really special for the customer, whether that's a three-inch phone, or it's a 9-inch tablet, or a 14-inch clamshell, or a 60-inch television playing Xbox games, we want to facilitate the creation of a common, a familiar experience across all of those devices, but a fundamentally tailored and unique experience for each device."

"So our team is now organized in this way. We had a core team that will bring those silicon interfaces together, bring those developer platforms together, approach delivery of apps to the customers in a common way. We have one team delivering the core services that will light up our devices. And then we have satellite teams each focused on each of the device categories, so each of them can be reflective of what the customer expects in that place."

At a low-level, Microsoft currently has three Windows client operating systems, Windows 8.x (x86), Windows RT 8.x (ARM), and Windows Phone (ARM). And given the terrible performance of each of these products over the past year, it's natural that some are wondering whether some consolidation is in order. Myerson was asked about Windows RT in particular, though he kind of punted the question by pointing out that the new version, Windows RT 8.1, would benefit from working on a " next generation of ARM silicon," meaning the TEGRA 4 that's in Surface 2, and the inclusion of Outlook RT. All this tells us is that for the very short term, Microsoft is simply pushing ahead with Windows RT as before: It's an OS for media tablets that for some reason runs Office too.

But he did offer this hint.

"As phones extend into tablets, expect us to see many more ARM tablets, Windows ARM tablets in the future."

The "phones extending into tablets" bit refers to phablets, which are smart phones with very large screens, generally 5 to 6 inches. And as we know, Nokia and other handset makers are intending to ship such devices, along with the Windows Phone 8 GDR3 software update that enables 1080p screens and other supporting technologies, in Q4 2013. We also know that Microsoft will ship an 8-inch Windows RT-based Surface "mini" tablet in Q4 2013, and that this device will run on a Qualcomm ARM architecture. So between Windows Phone phablets and Windows RT mini-tablets, we have a kind of interesting gray area. It's not clear where the phone ends and the tablet begins.

But think back to Myerson's previous comment about "one silicon interface, one set of developer APIs, and the same apps" on all of its devices. That's one runtime, some future version of the Windows Runtime. That's Windows RT and Windows Phone—which both run on ARM—being combined into essentially the same platform, running the same apps, and using the same developer environment. In other words, that's just common sense.

Today, Windows RT makes no sense as a general purpose PC operating system. It's Windows without the biggest selling point for Windows: That incredible collection of desktop applications and compatible devices. Microsoft bundles full Office today with Windows RT because no one would buy a device product called Windows if it didn't come with Office. (This is why Office Mobile ships on Windows Phone.) One has to think that a future Metro version of Office, Touch-first Office, will eventually be what comes with Windows RT. And that when that happens—next year, I bet—Windows RT will have a more comfortable and purposeful mission. It will become the devices-based version of Windows. For media tablets. And for phablets. It will be the basis for the next major version of Windows Phone. And they will run the same apps.

That's how I see this unfolding. And while Myerson wasn't particularly forthcoming, I think it's fair to read that as the evolution that’s coming.

Discuss this Article 37

So basically... WP8 users can upgrade two WP8.1 and possibly WP8.2 (if such a beast exists) but will be shut out of WP9 just like WP7 users were?

So... this encourages Windows Phone adoption HOW?

While I agree it should be possible to write apps that run across all devices... it seems a no-brainer that MS shouldn't throw away its reputation for backwards compatibility. WP.Next should be able to run WP8 apps just fine, right along-side the new WinRT apps.

If they can't/won't do that, then their ecosystem is essentially doomed. Users will feel burned one time too many and not come back.

There's also going to need to be a LOT of thought given to enabling developers to EASILY create apps that run across the vast gulf of 3.5" screens to 50" screens, and all the ranges of devices from finger touches to keyboard/mouse to controllers... without serious hardship. The APIs and frameworks will need to support this with minimal impact.

...except that the cutover to WP8 brought in the most important elements of the NT kernel to the mobile OS.

Keeping that in mind, there's no reason at all why apps developed specifically for WP8 can't run in future version of the OS that shares that same core. It is not coincidental that Windows RT shares that architecture.

The engineering teams just haven't unified the APIs yet, but once they do a lot of the barriers between devices will come down.

What I don't understand is why Microsoft doesn't make an RT dock and sell it as a fantastic VDI client for their VDI stack (the Citrix Receiver for RT currently sucks). It's about the same price as a thin client, except that you don't have to pay for a VDA license ($100/year). And, you have Office and an Exchange email client in case something in your VDI environment goes haywire, and both wired (dock) and WiFi access--something you'll never have with a thin client.

Much cheaper, much more functional. They would sell boatloads if they pitched and offered it, but they're still so consumer-focused they can't see this instant huge boost for RT.

Problem: MS has been wasting time doing this too long already. They should have more resources delivering stuff until all this unification is done. "Next year" - meaning probably late 2014 - is just too late.

So is it safe to say that if Windows RT and Windows Phone all get rolled up into one common package deal, then we can expect updates for ALL of their devices to be delivered 6-9 months after their "available", introduce more bugs than they're worth and be half castrated by the ISP's that deliver them (IF they deliver them)?

...or will Windows Phone still be the only one to experience that benefit?

In all seriousness, I think this is a GREAT thing and I hope against hope that they get there SOON. I've just been let down by Windows Phone SO many times since I adopted 7.5 back in the day, that I no longer have any confidence in Microsoft to do the right thing. This, to me, is their last chance to get things right and if they do, they will be SOOO right and just unbelievably wonderful and the all-around ideal mobile OS for me. If not...then I guess it's just one more let down in a very very long list of disappointments from the once-great could-have-been company.

Fully agree with you. But all of this is not being done in a vacuum. Microsoft arguably finds itself in a worse competitive position than it was in last year. At the very least the low side of the market - Chromebooks - have had a year to establish themselves and benefit from the expansion of the Android platform. Yet what we're hearing again this year is a similar refrain - it's coming together, but you need to be patient. Give us another year or so.

Coupled with this same refrain seems to be the same approach to the market - deliver products that are at the mid to high price points, with a question perceived value proposition. Fortunately, OEMs seem to be stepping forward with some interesting and very functional lower end models.

I'll make the same point as last year, Microsoft and its OEMs need to be very aggressive in this market. Yes, even be willing to buy market share (i.e. low price, high value proposition products). IMHO, this is the make or break year for Microsoft and the smoke signals are not encouraging.

"And they will run the same apps." Boy wouldn't that be nice, and unique in the industry. I don't think it will be that simple to create applications that scale all the way from phone to desktop though. You can't just scale up the interface of a great phone app, or use a powerful desktop app in a 4" screen. It will be interesting though.

It's a great vision... but can Microsoft sell it? I wasn't encouraged by the (rumored) prices of the new Surfaces. Still way too high, particularly for the RT. I mean, the OEMs are about to release some competitive & compelling hardware running Bay Trail for about $300-$350... which at least can run some legacy apps. The Surface RT can't run any legacy apps, yet may cost $499. Why would anyone choose a Surface RT?

I also hope the rumor that Microsoft wants to nix the Nokia tablet is false, because that's one pretty device (based on the leaked photos). Has Microsoft lost its mind?!?

"The Surface RT can't run any legacy apps, yet may cost $499. Why would anyone choose a Surface RT?"

I'm going to sound like a Microsoft employee, but since you asked...
1) Modern UI is more appealing than iOS or Android
2) I like that I get a full version of Office in the cost
3) Build quality of the Surface RT2 is very good
4) I want one computing device other than my desktop or my phone that I can use to watch movies, listen to music and play the occasional game.
5) I like that it's simple to hook up a usb keyboard and mouse and the Surface RT (in office) will recognize them instantly.
6) IE 10 is a great browsing experience on Surface RT (what I've seen at Best Buy)

All of my bullet points are hit...so the Surface works for me. Any missing apps I will simply remote desktop into my PC to use. Example, I plan on using Quicken on my Surface RT2 through Remote Desktop.

So Windows RT bombed in retail because it was not Windows, was a version 1 of something else, had no applications anyone wanted to run (except Office) and was overpriced. it sold well for $99 at Build.

The strategy is apparently to do exactly the same thing all over again. I am just wondering how this is different and how they think repeating last years' deal will be more successful. Microsoft have several billion dollar franchises so they can burn cash on this for a long time yet. However is there any point.

I have Windowsphone. It is great but the market is small. Windows RT isn't a great experience and the market is smaller.

Personally I spend 99% of my time on the desktop. At work I support enterprise apps that are all desktop applications. There are no significant Metro apps being used by business at all.

Microsoft have been right about a whole lot of technology but there has also been a lot of issues. When Windows 95 was launched the 'Microsoft Network' was going to be the walled garden PC users were pushed towards and all their data would be on MSN. Within a few months MS realised that the Internet was really the future and the walled garden approach was not going to cut it so they re-orientated the business.

In other words back in 1995 consumers and businesses rebelled against the path they were supposed to take. Consumers rebelled again when they bought ipods and iTunes instead of heavily DRMed music from Microsoft served up with devices that were difficult to use and underpowered. They rebelled again when they wanted touch phones and Microsoft mobile offerings were all about keyboards.

I am not saying the vision is wrong, moving to the cloud is wrong or MS don't have good products. I am saying that consumers have a way of changing the paradigm of corporate executive plans.

Right now I don't see Metro breaking through. Maybe touch enabled Office will do it but there are cheaper consumption devices than surface. if you want to spend $500 on a tablet then probably most people will choose iPad at this point.

For me the Windows RT devices have to be the Microsoft Chromebooks. They have to be the devices that connect to the Microsoft ecosystem. I believe they have to be sold on the services and sold as value products. Ordinary people see Microsoft as the boring office computer system. They buy home PCs as cheap PCs. Apple are seen as the premium brand. Premium PC prices are a minority interest. Chromebooks start at $199. This should be the price of a basic Microsoft tablet on ARM. With more memory and a better processor maybe $299 to $399. Anything more and it will sell in the same numbers as before.

The Microsoft apps ecosystem for Metro wont change until developers see lots of tablets in the market. There wont be lots of tablets in the market until people can buy them as a commodity item. They might have to sell at a loss to build a market and the ecosystem.

Conclusion. I can't make sense of the strategy without knowing how they are going to get a significant number of devices in peoples' hands. I can't see them doing that by seeing their devices as premium priced products.

I think the theory is that developer support will grow faster if you can develop one app and reach phone, tablet and even desktop users. We will see if it works.

I still say that RT is the best tablet OS out there. If it had apps, it would be very competitive. If this strategy gets the apps, they will be in a good position.

My main concern is MS constantly shifting focus. Why did WP7 start off on CE? Why put so much work into promoting a WP8 ecosystem, then switch direction again to a unified platform with RT? You cant keep selling developers on the latest and greatest, then yank the carpet out from under them when you move on to something else.

I think the theory is that developer support will grow faster if you can develop one app and reach phone, tablet and even desktop users. We will see if it works.

I still say that RT is the best tablet OS out there. If it had apps, it would be very competitive. If this strategy gets the apps, they will be in a good position.

My main concern is MS constantly shifting focus. Why did WP7 start off on CE? Why put so much work into promoting a WP8 ecosystem, then switch direction again to a unified platform with RT? You cant keep selling developers on the latest and greatest, then yank the carpet out from under them when you move on to something else.

Microsoft's RT and Windows strategy for tablets and phones isn't working because it is ridiculous. They were too late and they had a flawed product that is yet to be released in the correct way. I found iOS 7 compelling because it is refined, unlike Windows 8, and it is renovating in the hardware space with iPhone 5S.

For Microsoft to win, it needs to try another tack. Focus on the Enterprise, Office, Notebooks, X-Box. Office needs to extend more fully in Android and iOS. It is the new bridge to the consumer space. Make Word the Trojan Horse. Surface isn't compelling enough as a Tablet. Instead, create a super thin laptop computer and larger slates at 13 and 15 inches, which are Enterprise products first and Home products second.

Make Windows 8/Metro more compelling. Sorry, the existing design of Tiles isn't working. People are not impressed, but everyone is going forward with the Metro style, even Apple and Android. Microsoft was the first, but it will be the last to gain customer acceptance of its design style. Let people work with Live Apps instead of Live Tiles.

I would like Microsoft to release Windows 9 next year instead of what everyone might expect 8.3. Time to bring forth what everyone really want.

They need to use WinRT, not WinPRT, as the base on all devices. WinPRT is lacking in many ways: no roaming storage support, no built-in SkyDrive support, etc. I want to create one binary that runs on all the devices AND have all my settings transfer across them (e.g. I run my app on a tablet and change the settings then those new settings are xfer'd to my phone or XBoxOne when I run the app there).

Why this wasn't done in the first place is beyond me. It's not like MSFT is lacking developers. WinRT is significantly limited in capability, the least could have done to make it useful was to standardize across devices.

I think the goals are common os and common API. The only difference between a phone and a tablet will be the ability to make cellular voice calls. Otherwise both will be able to have 4G, Skype, txt, contact lists that most apps should have no permission to access etc.etc. Aside from the phone service there's no difference between a 6" phone and a 6" tablet. And os flavor should not be a consideration either. There should be tablets from 10 to 6 inches and smartphones in both arm and Intel variants, and arm ultrabooks and convertibles. I will be really disappointed if we don't see Lumias with airmont socs inside next year.

And yet...Windows 8 and Windows 8.1 are so similar, I wouldn't have seen any reason why the later would require you to blow away and reinstall all of your apps from Windows 7 while the former does not. Microsoft has been doing a great job of screwing its users lately; my money's on a complete reset...again. Or if not, they'll never deliver the WP update that will enable the interoperability.

With apps able to run on 1080p screens when GDR3 is released, won't Microsoft be able to open the floods gates and allow these apps to run on Windows RT? Or are the platforms still too different for this?
Also, with the Nokia Bandit (1520) being announced on October 22nd, will we see the Surface Mini and a presentation how Windows Phone and Windows RT 'merge', again with apps being able to run on both platforms (as long as these apps are GDR3 compatible)?

The developer community expected this on Windows 8 Timeline (2012). It clearly going to be a slow process, and not going to be realised until Windows 9 in 2015. Much to slow.
The consumers and developers have already moved onto Android.

I am not sure how Microsoft can assert "many more ARM Windows tablets and phones" The OEMS have given up on Windows and have moved to Android and Chrome, and Microsoft have snuffled up their only great Windows Phone OEM. Somehow I don't think all those great Finnish engineers will hang around in Microsoft/ Nokia that long.

There is nothing by the Directors or the Board that indicate that Microsoft really understand the mobile and consumer space yet. They continue to arrogantly assume, and flounder around, just expecting consumers simply to buy their products, without providing any compelling justification as to why we should. They should give up, or split it off, and concentrate on business services, before the next $billion write off with Surface 2.

"Hardware makers will sell over 1 billion smart phones this year, three times the market for PCs. And these firms will sell hundreds of millions of tablets this year as well, a market that could exceed the size of the PC market as soon as the end of 2013. Microsoft desperately needs to be part of that."
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Eh? I thought we were agreed that the last thing Microsoft needs to do is to copy Apple....

Cell phone ("smart" or otherwise) sales in the US are mostly subsidized over 1-2 year periods, which drastically lowers the price to consumers. Try selling them at their $500-$700 unsubsidized prices, so that they generally compete in price with inexpensive desktops & laptops, and watch what happens as smartphone demand crashes. But that's not really the issue--I mean, underwear sales dwarf PC sales & smartphone sales combined, but that doesn't mean anything at all. Apples and oranges (pardon the pun.) And tablets? I'll bet ~60% or > of the so-called tablet market this year will actually be hybrids of some kind with more in common with touchscreen netbooks than with the iPad.

Many traditional OEM hardware players are still skeptical and unconvinced that the so-called tablet market has legs, and are being very conservative in their approaches to this market. I'm certain that Microsoft's foolish ~$1B loss on RT ARM tablets impresses them greatly--and not in terms of them jumping into the same market with both feet...;)

More importantly, however, cell phones cannot replace desktop and laptop computers. Intel is having no trouble selling record numbers of cpus and chipsets that have no other use than as components in x86 boxes--and if Microsoft doesn't lose its grip on reality completely, it can hold on to a 90%+ share of the 300M-400M PC OS marketplace with Windows. AMD and nVidia are continuing to grow market share each year in the discrete gpu markets, markets that are distinctly non-portable, and are continuing to do R&D and to produce new and ever-more competitive products each year. Both AMD and nVidia are making inroads into portable devices of all kinds, to be sure, but neither company is abandoning their traditional PC-centric product development. With nVidia in particular, its total Tegra-related annual gross is still very much a tiny fraction of its traditional PC gpu business.

Is it Microsoft's contention that Windows 7 represents the penultimate desktop OS, and that the company cannot improve on Windows 7 for the x86 desktop? I hope not. I think the desktop could stand a lot more improvement in terms of OS R&D. My hope is that these other businesses, cell phones and tablets, don't cause Microsoft to throw out the baby with the bathwater, and decide there's no future in creating and supporting desktop OSes any longer. If the leadership at Microsoft should be so foolish as to move in that direction then I believe they can expect about the same level of success they saw with their RT ARM tablets this year, and somebody is going to come along--somebody like Google, maybe--and create the next x86, Windows-compatible OS, which will run next-gen Intel and AMD cpus and gpus, and Microsoft will become an historical footnote before you can say "RT."

But, maybe I'm all wrong...;) I guess we'll see fairly soon, I'd imagine. I think Microsoft is either shaping up or the company will be shipping out.

I really hope Microsoft comes through. I really don't want to change to Apple or Google/Android unless I have to. I'm still waiting for an app and device for credit card processing then I can ditch my Galaxy S II. I recently started using Outlook.com in place of my long and I mean long time use of Thunderbird and so far so good. I do much fancy stuff in the way of email so it's been fine for me to adjust to. I hope Microsoft listens to the right people and continue to adapt to the public needs and wants. I'm looking forward to seeing Bandit 1520. I was going to say Nokia 1520 but I wonder if windows will continue to use the Nokia name. All I want is a great eco system with a 5" phone, 10" RT tablet, and a 15" clamshell tablet with full blown Windows.

Please forgive the pitch; just trying to help out a fellow commentator. Regarding the credit card processing, my wife is currently using "Cube Credit Card Terminal" (free from the Windows Phone Store) on her HTC Windows Phone 8X. It is compatible with the entire Lumia line as well. They're cheap, easy, and the few times I've had to deal with their support they're *extremely* fast and helpful. My best friend has a Galaxy S4 and so far I haven't found anything non-gimmicky that he can do that I can't. :-)

For those who have expended much energy bashing Windows RT and calling for its death, I have always said that it will be around for a long time and I think this article talks to that point. RT has a place and like CE, will no doubt find its way into devices of all kinds like home electronics and appliances.
I happen to use and like RT and can properly separate in my mind what its uses are and are not intended for. It seems that Microsoft would have been better off by not labeling it and the products it runs on with the weird RT branding. It created a knee-jerk revulsion amongst users who did not fully understand what it meant and has tainted it as an option. Once Windows 8 matures a bit more and better quality apps arrive for it and RT, I think this ARM based OS will gain more acceptance overall.

Microsoft should do what Apple did, and leave the desktop OS alone. Create a new OS (Like iOS) that runs on Phones, Tablets and XBox only. No need to have a Surface Pro. I don't see anyone else trying to make a "Pro" version of their Tablets. Keep the format simple on these 3 devices.

Stop trying to evolve Windows into the Modern UI. There is no need to go down that path. As long as we can pull information from one format to the other without jumping through hoops to do it, it will be fine.

Merging Windows Phone and RT is something they should have done from the beginning. It was so obvious. A Basic tablet that simply runs apps just like a phone would makes sense. I don't know where people keep getting this idea that a Microsoft device is useless without Office. Do people use Android and Apple tablets for Office? Why is it that Microsoft and no one else can understand that there is a big chunk of people out there who just want to use a tablet as a toy? Maybe RT just was not a good name. There should have been a better way to say "this one is the Windows with no desktop only for apps like any other tablet, but this Windows is the full Windows." I don't know if it should have been Windows and Windows Pro or Windows Lite and Windows or some other naming scheme. But no one knew what the heck at RT was. They should have ran commercials advertising the different between a Surface and a Surface Pro.

If this happens, then I really hope that the RT end of things doesn't destroy what I love about WP. I don't mind RT, but it's not as good as WP, and Microsoft's missteps with certain aspects of WP8 as compared to WP7 have me a bit concerned with Microsoft is taking WP.

That said, if Microsoft actually manages to create a platform that works well on both desktops and phones/tablets, then I'd be all for it. I think it's important for Microsoft to differentiate its platforms from the competition by pushing the idea of not having to make compromises between devices.